For more than three decades the Town of Addison has been anticipating the arrival of DART rail service in Addison.  In preparation for its arrival, the Town has been acquiring property near the station and planning its use as part of a major transit-oriented development project. In 2018, the City Council adopted a plan that identified the vision and development principles for the property surrounding the contemplated DART rail stop and including DART’s property as well.  To begin implementation of that vision,  
 

• In 2020, the Town hired Cushman and Wakefield to serve as real estate advisors for the process that would select a master developer. 
• In October of 2020, the City Council also appointed Councilmembers Braun, Quintanilla, and Walden to serve with Town staff and Cushman and Wakefield on a Selection Committee to guide the solicitation of qualified developers through a Request for Proposals (RFP) process. 
• In April 2021 an RFP was released to the development community.   
• In June 2021, the City Council approved an Interlocal Agreement with DART to include its station area property in the development. 

Ultimately five development teams submitted proposals.  After review of all five proposals, the Selection Committee recommended that the City Council narrow the candidates to two finalists that would further refine and submit development concepts for consideration.   
 

At its March 22, 2022, meeting, the City Council made a motion to advance the development team of AMLI Residential and Stream Realty Partners (Master Developer Group) as the lone finalist to become the master developer for the Town’s transit-oriented development project in the Addison Circle area, subject to the successful negotiation of the final development agreements that will govern the project.  The Council also directed the City Manager to negotiate a Memorandum of Understanding (MOU) between the Town and Master Developer Group that outlines important terms and conditions that will be part of the final agreements.   
 

Given current uncertainties in the office market and the belief that tenants in the office building are critical to creating the active mixed-use environment needed for the success of the residential, retail, and entertainment uses, the Town is proposing to provide incentives to accelerate the development and occupancy of the Phase I office building. The incentives proposed by the Town and the performance-based commitments by the master development team are captured in a Memorandum of Understanding (MOU). 

The Memorandum of Understanding 
 

The MOU for consideration by the City Council memorializes the selection of the AMLI Residential/Stream Realty Partners team as the Town’s exclusive master developer for this project and guides the next steps and the various commitments that have been agreed to in principle by all parties.  The MOU addresses such topics as: 

• The basic financial and Phase I incentive agreements between the Town of Addison and the AMLI Residential/Stream Realty Partners team for the project
• Contemplated obligations by the parties for Phases II & III of the project 
• Timelines for commencement and completion
• Authority for the development team to begin its necessary due diligence such as surveying and environmental and geotechnical testing 
• Authority for the submission of a zoning application to rezone the property 

Several subsequent development and economic incentive agreements will also be required along with a sub-lease of DART’s property.  

MOU Details 
 

The following deal points are outlined in the MOU: 
 

Transfer Fee Paid to Addison – A transfer fee of 25 basis points, paid by the seller, will be assessed on all sales of the property and/or improvements following the initial sale/lease of the properties, in perpetuity.   
 

Phase I -- Stream Realty Partners Office Building and Parking Garage 
 

• Addison will contribute 2.3 acres of land at an estimated market value of $2 million. 
• Addison will contribute $6 million to the cost of a 625-stall parking garage at an estimated value of $15.6 million ($25,000 per stall) to provide public parking. 
• Stream will commission a parking study (cost up to $25,000) to determine the proper number of parking spaces. 
• Addison and Stream will enter into an agreement for free public parking for retail patrons and for the general Addison Circle/Addison Circle Park area for nights, weekends and special events.  
• Addison will commit to a 5-year lease for 60,000 square feet of space (40% of the building) at $34.50 per square foot gross ($2,070,000 per year). As the building attracts tenants, the lease obligation is reduced on a 50/50 basis until the obligation is removed entirely when 120,000 square feet has been leased. 
• Development and building permit fees will be capped at $150,000. 
• Stream’s off-site infrastructure costs will not exceed $500,000. 

Phase I – AMLI Residential Multi-Family Buildings with First Floor Retail  
 

• AMLI will ground lease approximately 10 acres from Addison for 99 years under the following terms: 
  • Addison receives pre-paid ground rent of $2 million, which will be credited toward future ground rent.   
  • The initial annual ground rent is $500,000, which will be adjusted annually based on the Consumer Price Index (CPI) at no more than 3% on a non-cumulative basis.  The ground rent will be reset 10 years after the rent commencement date, with subsequent resets every 15 years. The ground rent at each reset shall be calculated at 4% of the land value.  Land and improvements will be appraised, and the land value shall not exceed 6% of the total fair market value of the improvements and land.  
  • Ground rent commences the earlier of 48 months from construction start of AMLI Phase 1 or 30 days after the final Certificate of Occupancy is issued for the last apartment unit. 
• AMLI will commission and fund a Master Streetscape Plan for the retail, park, and streetscape plan in the surrounding areas from the North Dallas Tollway to Addison Road and from Addison Circle to Belt Line Road.  
• AMLI will contribute $1 million to infrastructure costs contemplated by the Master Street Scape Plan. 
• Addison will fund any off-site infrastructure costs exceeding $1 million. 
• Development and building permit fees will be capped at $250,000. 
• AMLI will contribute $200,000 to the Addison Arbor Foundation upon the issuance of a building permit to fund public art in the rights-of-way and public spaces within the development.   
• To maintain the quality of the development, after 10 years AMLI will have the right, with the Town’s approval to off-set the cost of certain capital improvements in excess of $1 million against future ground lease rent. The off-set is allowed once every 10 years, and the off-set shall not exceed the annual ground rent for the property.  

Phase I – “The Hub” Retail, Restaurant and Entertainment 
 

• Addison will reimburse up to $1.5 million for public infrastructure costs 
• Addison will provide a Chapter 380 sales tax sharing arrangement that will be capped at $1.5 million or 10 years, whichever occurs first.  The sales tax generated by the project would be shared at 75% for the developer and 25% for the Town and paid on actual sales tax receipts.   

Phase II – Stream Office and Parking Garage on DART Property 
 

• Stream will sublease the property from the Town as required in the Interlocal Agreement approved with DART.  
• All ground rent will be abated until one year after substantial completion of the Phase II Class A office tower.   
• Incentives (if any) requested by the developer will be negotiated prior to commencement of the project. 
• Subject to DART approval, rail and bus operations will be incorporated into the new development, for which Stream currently commits to a $160,000 contribution, with definitive construction costs to be determined in future agreements.  
• DART, Addison and Stream will enter into a parking agreement allowing free public parking for retail patrons during the day and the Addison Circle/Addison Circle Park area and for special events.   

Phase III – Hotel on DART Property 
 

• Stream will sublease the property from the Town as required in the Interlocal Agreement approved with DART. 
• Incentives (if any) requested by the developer will be negotiated prior to commencement of the project.    

Summary of Proposed Town Incentives and Participation – Phase I Estimate 
 

Office Land Contribution (2.3 acres)                                                  $ 2,000,000  

Office Lease Commitment (Potential Cost over 5 years)                  $10,350,000 

Office Parking Garage Contribution                                                   $ 6,000,000 

Public Infrastructure Costs (The Hub)                       $1,500,000 reimbursement
                                                                                   (if needed) * 

Sales Tax Rebate (The Hub)                                                      $ 1,500,000 cap  

Permit Fee Waivers (Developers Pay $519,576)                              $ 1,560,302 

_______________________________________________________________ 

Total                                                                                                 $22,910,302  

*While not anticipated at this time, the Town could have additional off-site infrastructure costs for the office and multi-family that exceed the developers’ commitment of $1.5 million. 

Throughout this process, Town staff has identified funding sources that are largely generated by the project itself (i.e., ground lease payments, sales tax, etc.) or has been previously authorized for purposes related to this type of project (i.e., 2012 Bond Funding for a parking structure) to meet the obligations outline in the MOU.  Staff will formalize the financing plan during the due diligence period and present the plan to the City Council and community as the definitive agreements are brought forward for City Council consideration and approval.